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April 1, 2016

Pro Bono Clinic Days Offer New Option to Help Pro Se Petitioners

by Nathan J. Richman

Taxpayers seeking help navigating the Tax Court normally have two options: low-income taxpayer clinics (LITC) or calendar call volunteer programs generally on the day of the trial session. Taxpayers with incomes that don't meet the qualifications for the LITCs generally do not have many options for pro bono help before they set foot in court.

A Maryland pro bono clinic day could change that.

The pro bono day provides free tax advice and the chance to talk with an IRS representative two to three months before the Tax Court's calendar call, according to Cheri P. Wendt-Taczak of Kelly Dorsey PC. The program, which now rotates between the downtown Baltimore LITC offices of the University of Maryland and the University of Baltimore, was first launched in July 2013 by the Maryland Volunteer Lawyers Service (MVLS), the University of Maryland LITC, and the Maryland State Bar Association (MSBA) Tax Section Pro Bono Committee, she said.

The program emerged from a March 2013 MSBA Tax Section study group meeting. Wendt-Taczak, then the program attorney for the LITC at MVLS, and Nancy M. Gilmore, associate area counsel (Baltimore), IRS Small Business/Self-Employed Division, were discussing calendar calls and pro se petitioners. Wendt-Taczak raised the possibility of "providing something similar to the calendar call program that the court does but [offering] something like that to petitioners ahead of time," Gilmore said.

The pro bono day's sponsors jointly craft a letter for the IRS to send out to pro se petitioners, usually four or five weeks before the pro bono day, Wendt-Taczak said. The letter, accompanied by an IRS cover letter, describes the opportunity for free tax advice, including the chance to speak with an IRS representative, related to the petitioners' Tax Court cases. The letter directs interested petitioners to contact MVLS to schedule appointments, she said. The letter states that the volunteers will provide advice at the pro bono day but will not enter an attorney-client relationship on that day.

The IRS sends the letter because it cannot provide the petitioners' addresses to the clinics and volunteer programs under section 6103 disclosure rules, Gilmore said.The letter is distinct from the stuffer notices the court sends out notifying petitioners of LITCs and volunteer programs, Wendt-Taczak noted.

Beverly Winstead of the LITCat the University of Maryland Francis King Carey School of Law said that pro se petitioners can come to the pro bono days with the notices they have received from the IRS and their records. Further, if a petitioner falls within a clinic's income guidelines, the clinic may take the case, beginning an attorney-client relationship, and enter an appearance before the Tax Court, she said. "But the thing that makes the [pro bono] days really, really great, I think, and beneficial for the LITC is . . . it gives the student attorneys the opportunity to really do thorough research, because we have more resources to research issues at the pro bono day than at calendar call, and we are not under pressure like when we are at calendar call," she said.

Wendt-Taczak said that the appointments typically last 30 to 45 minutes and provide a better environment for tax advice, with four conference rooms with large tables to spread out documents, compared to courthouse halls at calendar call. The pro bono day typically runs from 2 to 7 p.m., she said. Appointments have run as long as two hours, Winstead said.

Gilmore said that she has been the IRS representative at most of the pro bono days so far. She said she takes all of the legal files, and as many of the administrative files as she can, for the cases scheduled, adding that she has a separate office space where she stays until one of the petitioner conferences asks for IRS input. When that happens, someone takes her to the appropriate conference room where she can provide information such as the IRS view of the case, what issues have been raised (often needed if the petitioner has not retained the notice of deficiency or determination letter), and what information the IRS will need to settle the case, she said. "It allows me to explain in shorthand to the other attorney what's going on so that that attorney can then interpret it to the taxpayer," Gilmore said.

While typically more than half of the petitioners at pro bono day ask for IRS input and often have documents to show her, Gilmore said that most of the time she does not reach a settlement that day. "I will take the documents and tell them what to expect and when to expect it [or] what else they need to provide in addition to what they are giving us now," she said.

Gilmore said that her day at the clinic is similar to her experience dealing with petitioners on the day of calendar call, "except we have more time to sit down and explain things to the taxpayers. They have more time to understand it, to grasp what's going on."

Program Results

The Maryland clinic sponsors said that attendance has been consistent and substantial, if not overwhelming. The benefits to taxpayers have been noticeable, too, they said.

Wendt-Taczak estimated that one-quarter of the petitioners who received the letter scheduled appointments and only one or two typically cancel. Over 70 percent of the cases of petitioners who attended a pro bono day are settled before calendar call, she said. While the average pro bono day has eight or nine appointments, there have been as many as 20 and as few as five, Wendt-Taczak said.

Gilmore estimated there is a 25 percent response rate with "very few cancellations" and that approximately 80 percent of attendees settle before calendar call. While the settlement rate is close to the overall settlement rate for Tax Court cases, the pro bono days have led to far fewer continuances, she said, adding that almost half of pro se petitioner cases without the pro bono day meeting get continued (pushed to a later trial session) when the taxpayer first shows up at calendar call but almost none of those where the petitioner has been to pro bono day do.

Some cases get settled at calendar call, Gilmore said, "but it is generally not as favorable to the taxpayer because we are not able to get as much information to support their position." The more time the IRS has to get information from the taxpayer, the more likely it will arrive at the correct result, she said.

One of the biggest problems for the IRS and one of the impediments to pro bono day attendance is that petitioners often do not respond to mail from the IRS attorneys, according to Gilmore. The problem for pro bono days is that the IRS has to send out the invitations because of taxpayer privacy concerns.

Not only are pro se petitioners often unprepared to try a case, but often the first time they provide documents to the IRS is at the calendar call or on the day of trial, Gilmore said. "It creates a very chaotic scene and usually ends up actually harming the taxpayer," she said. Pro bono days can allow her to open up communication between the IRS attorneys and the pro se petitioners, she said. "The attorney now has a contact point, and somebody has actually spoken with the petitioner to tell them, 'This is what's going on, this is the attorney that is assigned to the case, you should expect to hear from them, and this is what you need to get to them,'" she said.

Gilmore singled out collection due process (CDP) hearing appeals as one area where the pro bono day can help a pro se petitioner. "A lot of times petitioners don't understand what a CDP case really entails. . . . They think that the court can give them the collection alternative that they want; they don't understand that that is not going to happen here," she said. Instead, at pro bono day, the volunteer attorneys explain to pro se petitioners that they would be better off dismissing their cases and filing new offers in compromise or installment agreements, she said.

Eric M. Bielitz, the attorney who currently organizes the MSBA calendar call volunteer program, praised the response from the practitioner community. Even though the program is still fairly new and there are a few kinks to work out with regard to staffing levels, "our issue is not not having enough hands but having too many hands, which is a wonderful problem to have," he said, "It is not uncommon to generally have one or possibly two attorneys and a couple of law students helping out some of these pro se folks at [pro bono day]."

Bielitz pointed to two additional benefits for petitioners beyond helping petitioners to understand the merits of their cases and to organize their arguments and documents. First, the volunteers can explain the basics of the rules of evidence and procedure, he said. Second, the volunteers can help ease the petitioners' suspicions of IRS counsel, he said, adding that petitioners can be afraid to turn over information the IRS needs in discovery.

Winstead said that even for cases that still go to trial, the pro se petitioners can get a lot out of pro bono day. Particularly in a substantiation case, the volunteers can tell the petitioners, "Bring these documents; this is what a judge is going to ask you; this is the stuff you need to get on the record," she said. Pro bono day is a chance for petitioners to meet with pro bono counsel in a much less stressful environment than the courthouse at the calendar call, she said.

Caroline Ciraolo, acting assistant attorney general in the Justice Department's Tax Division, was part of the initial conversation between Gilmore and Wendt-Taczak while she was at Rosenberg Martin Greenberg LLP. "This would not be a success without the Baltimore [IRS] office," Ciraolo said, attributing the success of the program to the work of Wendt-Taczak and Gilmore as well as Winstead, who was also involved in organizing the pro bono day program.

Ciraolo said the pro bono day program "was a success from day one." The first pro bono day included six pro se petitioners and several of those cases were resolved before trial, she said. "It has only been fine-tuned from there,"Ciraolo said.

Gilmore said that one of the reasons the program has been successful could be the geography of Maryland. "We are very fortunate in Baltimore that everything is very close together, so we are able to make this a single day event and actually have somebody on site," she said.

Gilmore said she thought that the act of petitioners making appointments could have led to the successful turnout for the program. "I think having people call in to make an appointment makes it more likely that they will actually appear. . . . They get it on their calendar and say, 'Oh, I have to be there at this time,'" she said.

"One of the reasons for the success of this program is because so many of the Maryland law firms supported their attorneys' participation," Ciraolo said.

Expansion and Reactions

Pro bono day in Baltimore has been well received by the IRS, practitioners, and even the Tax Court, and similar programs are being tried all over the country.

Gilmore said that other cities have been trying programs similar to Baltimore's pro bono day program. "Different people throughout the last couple of years have contacted me to ask for our experience," she said.

Thomas Travers, assistant division counsel (tax litigation), IRS Small Business/Self-Employed Division, said, "We have had pro bono days (or nights) in other cities, including Los Angeles and Seattle." He said that these other attempts often involve variations, such as video conferencing used in Seattle.

Travers said that one of the main obstacles has been the reluctance of pro se petitioners to meet with the IRS or prepare for trial before the actual calendar call. The pro bono day-style programs have been successful to the extent that those who have participated have been satisfied with the results, in general, he said, "but trying to increase the participation is the challenge."

Tax Court Chief Special Trial Judge Peter J. Panuthos has encouraged the bar to find more ways to help pro se litigants. "The Tax Court is very supportive of measures that help pro se petitioners resolve their tax issues more effectively and efficiently," he told Tax Analysts.

Guinevere Moore of Johnson Moore LLC said volunteers have tried to hold pro bono days in Chicago, but "unfortunately, the petitioners just don't come." When it does work, though, she said, a pro bono day-style program could both help achieve a fairer settlement and help petitioners arrive at trial better prepared to present their cases.

Moore highlighted a separate important benefit if the pro bono day-style program is at least 30 days before the calendar call: the opportunity to present a section 7430(g) qualified offer. A qualified offer must be made more than 30 days before trial and allows an award of fees, even for pro bono services, treating the taxpayer as the prevailing party as long as the total outcome is less than what the taxpayer offered the government to settle. A qualified offer is generally not an option for pro bono representation (as opposed to LITC representation) because the petitioner and pro bono counsel often first meet at calendar call, which can be the day of trial.

"I find qualified offers to be a helpful settlement tool, and I think that creating a way to use that tool even if the attorney and the petitioner meet for the first time at the call would be a worthy use of time and effort," Moore said. The 30-day qualified offer period does not reflect the realities of calendar call, she said.

Andrew R. Roberson of McDermott Will & Emery said, "I think a lot of clinics around the country are trying to do this with pro se taxpayers to see if they can resolve issues before the calendar call." He said that many times, early resolution depends on educating petitioners on tax procedures and the documentation they need to give to the IRS. Some petitioners think the calendar call is when they are supposed to first meet with the IRS, not realizing that trial might be that week or even that day, he said.

Roberson said, "The Tax Court does a great job of putting the information out there in basic terms for pro se taxpayers, but the legal process, whether in Tax Court or elsewhere, can be very confusing to people, and a layperson might not understand how the process works."

In a written statement to Tax Analysts, the American Bar Association Section of Taxation and its Pro Bono and Tax Clinics Committee said, "We applaud the efforts of these volunteers and IRS counsel to reach settlements in appropriate cases without the need for trial or involvement by the Tax Court . . . and the ability to meet with pro se taxpayers prior to the calendar call is an important step in ensuring that all taxpayers pay only the amount of tax that is legally due."

Jennifer E. Breen and Sheri A. Dillon of Morgan, Lewis & Bockius LLP are two of the new directors of the Washington DC Center for Public Interest Tax Law, the organization that helps match pro bono attorneys with pro se petitioners. They said that they would be interested in a pro bono day-style program if IRS area counsel is interested. "We'd like to see what the best practices are and try to do something similar," Dillon said.

Breen said that she could see the benefit of meeting with pro se petitioners before the Tax Court trial session. "I think that it would be a better use of resources, especially the Tax Court's, if they are able to get some sort of resolution earlier," she said.

Dillon said that the program could alleviate an inefficient use of court, IRS, and taxpayer resources caused by the delay of a continued case. They would want to know "why it worked well in one large city but not in others," she said.

T. Keith Fogg, director of the federal tax clinic at Harvard Law School, said that he had been part of an effort to launch a pro bono day-style program in Philadelphia while at Villanova University but that petitioners did not participate that day. He said having the IRS send a letter notifying petitioners about the clinic and using relatively inaccessible IRS offices in downtown Philadelphia could have hampered the effort. "You have to find a place to hold it that's convenient to the people who might be coming," he said.

Fogg said that resolving the case more than 15 days before trial would save the IRS attorneys from having to prepare pretrial memoranda and motions to dismiss for lack of prosecution. He said that the judges also benefit from having fewer cases in a trial session and would be able to better manage travel away from Washington.

In addition to those in Seattle and Los Angeles, Fogg said that he has heard of a successful program in Miami that uses multiple sites and video conferencing.

The pro bono day clinic is "another tool, and it sounds like a promising tool if we get the right places and the right time so that it's convenient for taxpayers," Fogg said.

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